ArmInfo. The Yerevan Thermal Power Plant (TPP) owes $52.3 mln to Gazprom Armenia CJSC, the Armenian subsidiary of Gazprom, life.ru reports, citing sources close to the Russian-Armenian intergovernmental commission.
According to those sources, Yerevan TPP - one of the major customers of the Russian state monopoly - owed 52.3 mln USD to Gazprom Armenia by July 2016.
The press office of Gazprom Armenia has told ArmInfo that Yerevan TPP has such a debt indeed, but noted that the major part of the debt has already been redeemed and negotiations on the remaining part of the debt are underway.
To recall, three years ago Armenia also had problems with its debts (300 mln USD) to Gazprom. At that time, a decision was taken to transfer a 20% stake in ArmRusgasprom and the uncompleted fifth power unit of the Hrazdan TPP to the Russian side.
Theoretically, the state must have no debts after the deal: under the contract between the two governments the Armenian side assumed an obligation not to "generate" them any more, a governmental official has told Life. New debts affect first of all Gazprom's subsidiary, the interlocutor in the gas concern says. Under the agreement with Armenia, Gazprom's subsidiary is working out a general scheme of gas supply for Armenia and it needs financial means for that.
Russia carries out its obligations, but the Armenian side does not, the Russian governmental official says. In September 2016, Russia reduced the gas price for Armenia from $189 to $165 per 1 cu m, as stipulated in the agreement, Life's source recalls, noting that Gazprom was given a priority access to electricity export and purchase from the fifth power unit of Hrazdan TPP. The government asked the sides to repay the debt by early November 2016, the official says.
Thus, the old scheme of debt redemption by transferring property may be applied in Armenia again, Life says. In this case, the matter will concern Yerevan TPP. "The transfer of property is quite a popular but last resort measure in power engineering," says Alexey Grivach, Deputy Director of the National Energy Security Fund. "For example, Pskovskiy region was trying to settle its problems with Gazprom using similar scheme. Often thermal power producers had to put in pledge their plants to Gazprom because of the debts for the supplied gas. The property should be assessed, if the assets correspond to the amount of the debt, such a deal will be beneficial for the monopoly.
"Usually, debts are generated on the level of consumer, than they go up the chain and reach the supplier of the fuel", Director General of the Institute of National Energy Sergei Pravosudov adds. Formally Gazprom has the right to stop supplying gas to the TPP. This would evoke wide response and it would be short- sighted to spoil relations between Armenia and Russia, so it is unlikely that the gas supply to TPP will be stopped, Life's interlocutor close to Armenia's Energy Ministry thinks.
"Cutting off gas is a too strong social factor, which may spark national demonstrations like the ones held in previous years, when the people were protesting against high tariffs on fuel", political scientist, senior consultant at the Saint Petersburg Center of Social Studies Oleg Andreev recalls. "National demonstrations in turn may lead to shift of power. Russia is very interested in maintaining friendly relations with Armenia as it is the main ally in the Caucasus. So, no matter how much Gazprom wants to cut off gas, the government will not allow it doing that", the interlocutor is assured. "It is even better to have such small debtors, they can be twisted around finger", he says.
To note, on June 17 Armenian Parliament approved the Agreement with IBRD signed on May 12 2016, under which the World Bank will provide a US$30 million IBRD loan of variable spread (approximately 1.8%) with a 14.5-year grace period and the total repayment term of 25 years. Deputy Minister of Energy and Natural Resources Areg Galstyan said the main part of the loan will be repaid in 2030-2040. The tranches will be issued in the period of 2016 up to July 31 2030. The loans will be provided to the Armenian NPP ($8.5mln) and Yerevan TPP ($21.5mln). Both the facilities must re-register the loans previously raised from the local commercial bank under high interests. In addition, the Yerevan TPP will redeem its debt to Gazprom Armenia for the gas supplied. The deputy minister said that no privatization of the state facilities is planned in the mid-term outlook. Consequently, the burden of the debt will be on the given two companies under the subcontract with the Finance Ministry.